The U.S. healthcare system continually confronts the challenge of controlling costs, improving quality and patient safety, and increasing or maintaining patient access to care. Payors and purchasers of healthcare (both public and private) strive to develop mechanisms to guarantee that they are purchasing the highest-value care – seeking to ensure that amounts paid take into account and provide incentives encouraging the delivery of high-quality, cost-efficient care. Through “value-based purchasing” (“VBP”) strategies, healthcare payors and purchasers are transforming from passive payors of claims (as in a traditional fee for service system) to active purchasers of quality care. To date, employers, health plans, and the Centers for Medicare and Medicaid Services (“CMS”) have implemented well over 100 VBP programs. However, progress is slower than anticipated. As the Institute of Medicine (“IOM”) and others have noted, adoption of VBP reforms may be hampered by legal barriers arising from a number of state and federal laws. The goal of this paper is to identify potential state and federal legal impediments to implementing VBP in healthcare.

The current medical malpractice system is broken. Many patients injured by malpractice are not compensated, whereas some patients who recover in tort have not suffered medical negligence; furthermore, the system's failures demoralize patients and physicians. But most importantly, the system perpetuates medical error because the adversarial nature of litigation induces a so-called “Culture of Silence” in physicians eager to shield themselves from liability. This silence leads to the pointless repetition of error, as the open discussion and analysis of the root causes of medical mistakes does not take place as fully as it should. In 1993, President Clinton's Task Force on National Health Care Reform considered a solution characterized by Enterprise Medical Liability (EML), Alternative Dispute Resolution (ADR), some limits on recovery for non-pecuniary damages (Caps), and offsets for collateral source recovery. Yet this list of ingredients did not include a strategy to surmount the difficulties associated with each element. Specifically, EML might be efficient, but none of the enterprises contemplated to assume responsibility, i.e., hospitals and payers, control physician behavior enough so that it would be fair to foist liability on them. Likewise, although ADR might be efficient, it will be resisted by individual litigants who perceive themselves as harmed by it. Finally, while limitations on collateral source recovery and damages might effectively reduce costs, patients and trial lawyers likely would not accept them without recompense. The task force also did not place error reduction at the center of malpractice tort reform—a logical and strategic error, in our view.

In response, we propose a new system that employs the ingredients suggested by the task force but also addresses the problems with each. We also explicitly consider steps to rebuff the Culture of Silence and promote error reduction. We assert that patients would be better off with a system where physicians cede their implicit “right to remain silent,” even if some injured patients will receive less than they do today. Likewise, physicians will be happier with a system that avoids blame—even if this system placed strict requirements for high quality care and disclosure of error. We therefore conceive of de facto trade between patients and physicians, a Pareto improvement, taking form via the establishment of “Societies of Quality Medicine.” Physicians working within these societies would consent to onerous processes for disclosing, rectifying and preventing medical error. Patients would in turn contractually agree to assert their claims in arbitration and with limits on recovery. The role of plaintiffs' lawyers would be unchanged, but due to increased disclosure, discovery costs would diminish and the likelihood of prevailing will more than triple.

This article examines the legal and policy issues surrounding the establishment of Societies of Quality Medicine, particularly the issues of contracting over liability, and outlines a means of overcoming the theoretical and practical difficulties with enterprise liability, alternative dispute resolution and the imposition of limits on recovery for non-pecuniary damages. We aim to build a welfare enhancing system that rebuffs the culture of silence and promotes error reduction, a system that is at the same time legally sound, fiscally prudent and politically possible.

Imagine that you are lying in a hospital: conscious, partially paralyzed, and terminally ill. Physicians predict that you will die in a couple of weeks. You have heard about the shortage of viable organs in the United States and consider consenting to transplantation of your organs after you die. Trying not to think about your imminent death, you open the New York Times brought by your family and skim the table of contents. You notice an article and slowly start to read. The headline reads “Surgeon Accused of Hurrying Death of Patient to Get Organs.” After you finish reading, you are not willing to donate your organs for transplantation. It does not matter that you are altruistic or that you want your life-sustaining treatment to be removed when your condition worsens. You do not want your death to be hastened. You do not want the physician to play God. You want to die with dignity in a peaceful and friendly environment.

Primary care is crucial to the United States health care system. It is essential to the provision of high quality care; including the ability to reach health outcomes, ensure patient satisfaction, and facilitate efficient resource use. Primary care also places strong “emphasis on health promotion, disease prevention, and care of the chronically ill.”

Physicians have introduced two business models in their attempts to improve the delivery of primary care: Concierge Medicine (“CM”) and the Patient Centered Medical Home (“PCMH”). Both models provide personalized, comprehensive preventive care services.

CM is a private medical practice in which the physician charges patients an annual fee to be a patient in the practice. In exchange, the physician limits the number of patients in order to offer more personalized services and amenities such as: direct access through email or cell phone, same day or next day appointments, longer, more personalized appointments, house calls, and physician accompaniment to a specialist.

The day before the inauguration of his Democratic successor, President George W. Bush oversaw the promulgation of an administrative rule that extended “sweeping” new conscience protections to healthcare providers, one which would allow them to refuse to participate in or refuse to refer for medical services to which they morally or religiously object. Enacted in a funding regulation through the Department of Health and Human Services (“HHS”), the rule – commonly called the Provider Conscience Regulation (“Regulation”) – purported to clarify and implement existing federal law; by its own terms; however, the Regulation pushed the boundaries of those laws, granting protections to a broader class of individuals and across a wider range of services. In so doing, the Regulation sought to resolve an ongoing tension between patient access and provider autonomy, yet it served to reignite a long-standing debate over the proper role of morals in medicine.

When Lind Weaver starting receiving collections demands for a foot amputation she never had, she assumed it was a clerical error. Unfortunately, the operation had been performed on someone pretending to be Weaver, causing Weaver's medical history to become entangled in the thief’s. Media reports about identity theft show Weaver's experience is far from unique. For example, a Chicago man was arrested after using his friend's identity to obtain $350,000 worth of cardiovascular surgery at a local hospital. Hackers broke into the medical records of thousands of University of California students. A staff member left a laptop containing records of patients of a local AIDS clinic on Boston public transportation.